MFs sit pretty on cash,miss today’s rally

Despite the buoyant mood exhibited by markets since mid-March,many mutual funds remained sceptical and maintained high cash positions. As on April 30,of the 35 mutual funds in the country,20 had more than 10 per cent of their total assets in cash. The industry had as much as Rs 14,590 crore in cash. Of this,nearly 62 per cent,or Rs 9,073.59 crore,was with just three players — Reliance Mutual Fund,UTI Mutual Fund and SBI Mutual Fund.

While equity markets yielded 9.18 per cent in March and 17.45 per cent in April,many mutual fund houses remained reluctant and,on an average,maintained 15 per cent of their assets under management (AUM) in cash. Experts say funds must not hold more than 5-8 per cent of their assets in cash. Value Research chief executive officer Dhirendra Kumar said,”The markets caught everyone by surprise. It is true MFs could have missed some opportunity.” The country’s largest fund house,Reliance Mutual Fund,happens to be the one with the highest cash pile-up. As on April 30,the fund house had Rs 5,905.26 crore,or 26.89 per cent,of its open-ended equity funds lying idle as cash. “We have been holding cash for quite sometime. This was a deliberate call and whenever we find good opportunity,we deploy cash. Going forward,we will keep reviewing our cash position,” said Reliance Mutual Fund CEO Sudeep Sikka.

JP Morgan Mutual Fund,with Rs 195.07 crore or 25.54 per cent of its total assets in open-ended equity funds,follows closely. Other biggies like ICICI Prudential Mutual Fund had 11.42 per cent of its assets as cash and HDFC Mutual Fund kept 6.44 per cent assets in cash. SBI Mutual Fund,which commands a good market share,held 16.15 per cent in open-ended equity funds at Rs 1,478.74 crore in cash.